MidCap Financial Investment (NASDAQ:MFIC – Get Rating) and Franklin Universal Trust (NYSE:FT – Get Rating) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, dividends, risk, profitability and institutional ownership.
Valuation and Earnings
This table compares MidCap Financial Investment and Franklin Universal Trust's gross revenue, earnings per share (EPS) and valuation.
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| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
| MidCap Financial Investment | $213.15 million | 3.49 | $82.36 million | $0.73 | 15.56 |
| Franklin Universal Trust | N/A | N/A | N/A | N/A | N/A |
MidCap Financial Investment has higher revenue and earnings than Franklin Universal Trust.
Dividends
MidCap Financial Investment pays an annual dividend of $1.48 per share and has a dividend yield of 13.0%. Franklin Universal Trust pays an annual dividend of $0.65 per share and has a dividend yield of 9.6%. MidCap Financial Investment pays out 202.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. MidCap Financial Investment has raised its dividend for 1 consecutive years and Franklin Universal Trust has raised its dividend for 1 consecutive years.
Volatility and Risk
MidCap Financial Investment has a beta of 1.6, indicating that its share price is 60% more volatile than the S&P 500. Comparatively, Franklin Universal Trust has a beta of 0.68, indicating that its share price is 32% less volatile than the S&P 500.
Institutional and Insider Ownership
29.3% of MidCap Financial Investment shares are owned by institutional investors. 0.9% of MidCap Financial Investment shares are owned by insiders. Comparatively, 7.8% of Franklin Universal Trust shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Profitability
This table compares MidCap Financial Investment and Franklin Universal Trust's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
| MidCap Financial Investment | 20.92% | 9.54% | 3.67% |
| Franklin Universal Trust | N/A | N/A | N/A |
Analyst Ratings
This is a summary of recent recommendations for MidCap Financial Investment and Franklin Universal Trust, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
| MidCap Financial Investment | 0 | 2 | 1 | 0 | 2.33 |
| Franklin Universal Trust | 0 | 0 | 0 | 0 | N/A |
MidCap Financial Investment currently has a consensus price target of $12.17, suggesting a potential upside of 7.10%. Given MidCap Financial Investment's higher probable upside, equities research analysts plainly believe MidCap Financial Investment is more favorable than Franklin Universal Trust.
Summary
MidCap Financial Investment beats Franklin Universal Trust on 9 of the 11 factors compared between the two stocks.
About MidCap Financial Investment
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Apollo Investment Corporation is business development company and a closed-end, externally managed, non-diversified management investment company. It is elected to be treated as a business development company (BDC) under the Investment Company Act of 1940 (the 1940 Act) specializing in private equity investments in leveraged buyouts, acquisitions, recapitalizations, growth capital, refinancing and private middle market companies. It provides direct equity capital, mezzanine, first lien secured loans, stretch senior loans, unitranche loans, second lien secured loans and senior secured loans, unsecured debt, and subordinated debt and loans. It also seeks to invest in PIPES transactions. The fund may also invest in securities of public companies that are thinly traded and may acquire investments in the secondary market and structured products. It prefers to invest in preferred equity, common equity / interests and warrants and makes equity co-investments. It may invest in cash equivalents, U.S. government securities, high-quality debt investments that mature in one year or less, high-yield bonds, distressed debt, non-U.S. investments, or securities of public companies that are not thinly traded. It also focuses on other investments such as collateralized loan obligations (CLOs) and credit-linked notes (CLNs). The fund typically invests in construction and building materials, business services, plastics & rubber, advertising, capital equipment, education, cable television, chemicals, consumer products/goods durable and non-durable and customer services, direct marketing, energy – oil & gas, electricity and utilities. The fund also invest in aerospace & defense, wholesale, telecommunications, financial services, hotel, gaming, leisure, restaurants; environmental industries, healthcare and pharmaceuticals, high tech industries, beverages, food and tobacco, manufacturing, media – diversified & production, printing and publishing, retail, automation, aviation and consumer transport, transportation, cargo and distribution. It primarily invests in United States. It primarily invests between $20 million and $250 million in its portfolio companies. The fund seeks to make investments with stated maturities of five to 10 years.
About Franklin Universal Trust
(Get Rating)
Franklin Universal Trust is a closed-ended balanced mutual fund launched by Franklin Resources, Inc. The fund is managed by Franklin Advisers, Inc. It invests in the public equity and fixed income markets of the United States. The fund invests in companies operating in utility sector. It employs fundamental analysis to invest in a diversified portfolio of corporate bonds and dividend paying utility stocks. The fund benchmarks the equity component of its balanced portfolio against the S&P 500 Electric Utilities Index and the fixed component against the Credit Suisse High Yield. Franklin Universal Trust was formed on September 23, 1988 and is domiciled in the United States.
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